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Simply put, being an independent contractor is one way to be self-employed. Being self-employed means that you earn money but don't work as an employee for someone else.
Self-employed people earn a living by working for themselves, not as employees of someone else or as owners (shareholders) of a corporation.
The net income you earn from your own trade or business. For example, any net income (profit) you earn from goods you sell or services you provide to others counts as self-employment income.
Can I employ self-employed staff? Having multiple income streams is not uncommon nowadays and that means you can be both employed and self-employed. If you are looking to hire someone who is self-employed as an employee, there are no rules that say that person is ineligible.
Being self-employed means that you earn money but don't work as an employee for someone else. It can include anyone from the owner of a convenience store to an artist who displays in galleries, to a freelance designer, to the founder of a large company.
The law does not require you to complete a contract with your self-employed or freelance workers - a verbal contract can exist even when there is nothing in writing.
If you are an independent contractor, then you are self-employed. The earnings of a person who is working as an independent contractor are subject to self-employment tax. To find out what your tax obligations are, visit the Self-Employed Individuals Tax Center.
As a freelancer, you also have to manage invoicing and following up on payments. When you work as an independent contractor, you work on an hourly or project-based rate that may vary from client to client or job to job. If you work independently, you have control over setting and negotiating your rates.
Step 3: Last Employer Self-employed individuals may enter "self-employed" for the last employer's name and include his/her own address and contact information in lieu of the "last employer's address and contact information."
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed.